Version:1.0 StartHTML:000000249 EndHTML:000065207 StartFragment:000001973 EndFragment:000065151 StartSelection:000001973 EndSelection:000065141 SourceURL:http://www.anapfoundation.com/articles/channels-tv-fuel-subsidy-interviews-06-jan-2012 Channels TV Fuel Subsidy Interviews Channels TV Fuel Subsidy Interviews with Atedo N. A. Peterside, C.O.N. President & Founder, ANAP Foundation, Chairman of Stanbic IBTC Bank PLC & Cadbury Nigeria PLC & Member, National Economic Management Team.
Volume One: 06 January, 2012.
|“Nigerians, please listen; Do you really think that President Goodluck Jonathan does not know how to leave the petrol price at N65 per litre…enjoy 4 years…have fun….4 years from now he says goodbye and goes? Who does not know that is an easier option for him? So, why would a man who has that easy option say NO I am not taking it…I want to transform this country?”|
CHANNELS TV INTERVIEWERS: We are joined by Mr Atedo Peterside; who is a member of the National Economic Management Team. Thank you for coming this morning.
MR ATEDO PETERSIDE: You are welcome.
CHANNELS TV: In the light of what seems to be going on in the country (protests) are you surprised?
ATEDO: I think it was expected, we were never going to be able to take an action of this nature without controversy, anger and misunderstanding. But I would like us also to look at the facts and also discuss the fiscal viability of the nation. Let me give you some statistics off-head; Nigeria is a country of 36 states, we are not a rich country, we are a poor country. I can tell you, from official statistics, that the poorest state in Nigeria is Jigawa State. In Jigawa State, 95% of the people are poor (living on less than $2 a day). In Kebbi, 89% are poor.
Last year, we (Nigeria) spent perhaps N1.3 trillion on a fuel subsidy. It is about the fiscal viability of a nation, in the sense that money that is being dispensed on a subsidy, which is also being consumed by wealthy Lagosians; they have the lion’s share of the consumption. Also, it is the upper and middle class who consume the lion’s share of that petrol in Lagos. That money does not belong to them; Jigawa State has its own share.
From my own little analysis, Jigawa State should be getting N14bn of that money (their share of an estimated N1.1 trillion fuel subsidy estimate for 2012) transferred to them i.e. between the State Government and their L.G.A’s (Local Government Areas). The issue is that if 95% of the people are poor in Jigawa State, do they have the right in 2012 to receive an extra N14b of money which rightfully belongs to them, some of which historically has been spent on wealthy Lagosians and/or diverted to neighbouring countries?
It is also about equity, so the point I’m trying to make is that the poorest state as I said earlier is Jigawa, the 2nd poorest state is Kebbi, in Kebbi, 89% of the people there are poor.
In Bauchi, the poverty index is about 86%. So I’m talking about equity as well. Now people will ask me things like; why isn’t the Federal Government trying to emphasize these aspects? The Federal Government has to be careful, if they say what I’m saying, people will say, are you trying to turn Nigerians against themselves? Are you trying to tell people in Jigawa that they should get up and demand their rights? Well I have no problem telling them that. I saw a statement that ANPP said they are against the removal of the fuel subsidy. Yobe is another poor state. they stand to get an extra N11b, let the Governor of Yobe get up and tell his people that he doesn’t want the N11bn and that he prefers that some of that money be spent on wealthy Lagosians. I am in favour of some subsidies, but only if they are targeted at the poor and not the rich also.
CHANNELS TV: Are they?
ATEDO: How is that possible right now with the petrol subsidy? What we have right now is an arrangement whereby the richest person in the country, if he also has the largest number of cars, gets the lion’s share of the subsidy because he consumes more of it. How will that help the poor in Jigawa? So it is also about equity. Now I’m not saying that any State Government or L.G.A doesn’t have a right to design a subsidy programme. All I am saying is that, for goodness sake, design it so it goes to the poor and the poor alone. If you share this N1.1 trillion fuel subsidy estimate out, the States get an extra N411 bn, L.G.A’s get an extra N203 bn, Federal Government’s share is an extra N478 bn. Let each State or LGA that wants a subsidy take it’s own share and design one for its own people. Let me suggest how you should design one. If you want to help the poor, you can create fuel vouchers in your own state, and give it to the poor and needy. Let them use that to help them buy petrol or kerosene. How does subsidizing the petrol purchases of the very wealthy help the poor in Nigeria?
So let us look at the facts properly. I am a little bit disappointed also at the position taken by some State Governors and some of the Members of the House of Representatives and Senate because they are the ones that should be making this argument that a part of this money is being consumed by the very rich via a petrol subsidy, using funds which partly “belong” to poor people in Jigawa, Kebbi, Bayelsa etc,
CHANNELS TV: Without conceding anything, what those who are perceived to be against deregulation are saying is that YES, we support full, proper deregulation, but the government of the day has not done what it needs to do. They talk about corruption in the oil sector, but what have they done about it? Who are those that are guilty of perpetrating this crime? If you haven’t put in place structures to make sure that corruption is tackled, what is the guarantee that this same “cabal” as it were will not hijack this process when it comes up later?
ATEDO: Let’s look at the facts again. Even if we accept that the estimated fuel subsidy figure for 2012 would be in the order of N1.1trn. Right now that money is dispensed through NNPC and the Ministry of Petroleum Resources. My point is that, is it not better to take that N1.1 trillion and give each State and LGA their own share to manage at the local level? I agree with you though that the Federal Government and all governments in the country must do 3 things; 1) they must eliminate all wasteful subsidies of the type that are enjoyed largely by the rich, like this one, because it’s the biggest single item of waste; 2) they must streamline all government expenditures which are wasteful, even if they are legal.
I am sure you are aware that the Federal Government announced a committee headed by Steve Oronsaye. What is their task? To look at all Federal Government agencies and streamline them and avoid duplicity and eliminate those that have lost relevance. In Abuja. there are multiple agencies, a good number of them, with all due respect doing little or nothing. They must be funded because they were created by law, so the Government can’t even say I will close this one down because that would be illegal.
The Committee will finish their work next month. A list of agencies that have no business at all being in existence will emerge and they should be shut down and the allocation to them should revert to more serious items. Even if the Federal Government wants to shut them down, the Federal Government cannot do it alone, they would be breaching the law to have that agency shut down, so the National Assembly must now wake up after the Committee has finished its work next month and then amend those laws or strike them off saying that Nigeria no longer needs the following agencies. If we spend 12months to achieve that, then in the meantime, we have to keep on funding people who are doing nothing. So this is an urgent task so the Government must withdraw all wasteful subsidies, they must focus on recurrent expenditures to eliminate all waste; and 3), they must fight corruption. All the three must go together. I’m sure you have heard the story about Police Pension Commission where ghost workers amounted to N1bn a month? Earlier on didn’t you hear INEC saying in a bid to have people registered for the elections, some states recorded multiple registration? What happened to going after the “big guns” who were behind this?
CHANNELS TV: When we talk about fighting corruption; we talk about a couple of other things. People have been saying that most State Governments are even on the side of the Federal Government on this subsidy removal. We just have a handful of them that say no to subsidy removal. Then again, remember that January 4th this year, we saw what happened in Singapore, where about 51% was actually taken off the take home pay of some Govt officials to the extent that the Prime Minister had a big income reduction. People are saying now that they already agreed with the government that the subsidy must be removed. What they are saying is that everyone should have a taste of it? Why isn’t the Government also looking towards the cost of governance reduction?
ATEDO: I have already mentioned that the area of massive cuts is via the shutting down of complete agencies. That effort at the Federal level is ongoing. The Committee I spoke of are finishing their work next month.
CHANNELS TV: If they had finished before coming out with the subsidy withdrawal, I’m sure the people would not have taken to the streets.
ATEDO: You know you have to pursue problems simultaneously, everyday you must fight corruption, everyday you must fight waste. You have to move all in unison. We also have a calendar year. A budget cycle which is from January 1st to 31st December. That Committee has been working 24/7, they worked through Christmas, they worked through the New Year and they are finishing their work next month. The point I’m making is that even if they finish, the danger now is that the National Assembly (who have paid themselves a fortune “legally”), might not get up and amend the laws to scrap these agencies and so the “bleeding” might still continue. Some of them will even lobby the Senate, saying please don’t pass a law to remove us from existence.
Let us demand action, it’s no use quarrelling with the visible one which is fuel subsidy withdrawal. The waste in the system is what we should all get together and fight after all this noise and protests, Senate must wake up, realizing that the whole world is watching them. Afterall they pay themselves a fortune, they should get up and amend laws, scrap agencies, save the country billions of Naira being wasted. Now I have not heard any single Senator from an Opposition Party – Action Congress, CPC, or ANPP get up and say “gentlemen in Senate, we are paying ourselves too much. Why haven’t they said so?
CHANNELS TV: Isn’t it the same with the Executives?
ATEDO: True, I agree with you that everybody should sacrifice. I’m supporting you and saying, that let those in ANPP get up. How about Action Congress and CPC? The previous Senate had more people from PDP, not so? This Senate has an enlarged membership from the Opposition Parties are they quietly enjoying the same bloated remuneration?
CHANNELS TV: The Executive has also not helped us by telling us what Senators receive. Not just the Senate but all members of the National Assembly they claim have received a cut in pay. How true that is we do not know because we do not know what they receive?
ATEDO: That is what I’m saying, why don’t you (media) put them on air like you put me on air. Let the Senate President come and sit down and tell you how much a Senator earns in total, let’s verify it. Bring the Speaker of he House of Representatives as well. Let him come and tell us how much they pay themselves and why. Let him justify it. I agree with you, everybody should take part in this belt tightening. It should not be fuel subsidy alone. It should be, all wastage and we should fight corruption too. We talk about ghost workers that were discovered. At PHCN, they refused to go for biometric testing to be sure that they all exist. When ghost workers are discovered, why are the perpetrators not chased by the EFCC? Why is it that EFCC only wants to chase high profile cases; the odd governor?
CHANNELS TV: Now looking at the whole scenario where government has gone ahead to make this announcement, we had Prof. Tam David here, he talked about the model that needs to be put in place, before the government eventually carries out a proper deregulation as it were, because if it is not properly done, we will be talking about in years to come. But at the moment, tell us, do you agree with Government’s position now that the decision that they announced on the 1st of January as it were, in spite of the environmental factors?
ATEDO: Yes I agree with the Federal Government and the State Governors on this matter. Let me explain why. I said we have a budget cycle that starts January 1st. I agree that extra funds should go to Jigawa State; an extra N14b, I agree that more funds should go to Kano; an extra N20b and so on. Let the lion’s share of the money be dispersed to the rightful owners. That’s what should be done from January 1st. But I also agree that the recommendations of that Oronsaye Committee should be implemented speedily so that there can be savings from the budget arising from funds previously for all those useless agencies in Abuja, where people sit down doing nothing but basically consume the nation’s resources. Likewise on corruption, we now have a new boss in EFCC, Lamorde. People say he is good, he is stern, let him tell us who the ghost workers are? Who is behind that scam? Who are the people who steal pensions in Abuja?
CHANNELS TV: I’m thinking of how we can target the really poor in the society, how they can benefit from all of this, trying to see if we can liken it to the meal vouchers especially what Americans get.
ATEDO: I support a fuel subsidy that is targeted exclusively at the poor and I believe this can only work at State Government level because that is where the personal income tax records reside.
CHANNELS TV: How can they do that knowing fully well we still have that corruption lurking around? How can we identify the poor in our society to get the fuel voucher?
ATEDO: One thing is sure, if you cannot target something at the poor; don’t waste it on the rich. Do you agree? Under the present system, the rich man consumes the lion share of it because he has the assets, he has the most vehicles. My point is that a fuel voucher system should be left to each state, even the local governments.
Years ago I worked in a bank that dispensed both fuel vouchers and luncheon vouchers.
There is nothing wrong with Lagos State or Rivers State giving out fuel vouchers. It’s for them to decide what income bracket they wish to target. I am in favour of all such subsidies that are targeted only at the poor and the needy. Power is an excellent example. You can give a subsidy on power and ensure that only the poor enjoy it. The energy charge can be set to a level where the consumption of power is very modest. As soon as you utilise major appliances; your rate jumps up because it assumes you are a rich man. That kind of subsidy can be sustained. In this year’s budget, there’s a provision for the subsidy of electricity.
In fuel, like I told you earlier, the big problem is that the richest person enjoys the most and that must stop.
CHANNELS TV: What people are saying is, yes, we get your point, how do you tell the man out there that government needs to adjust, we all need to adjust, subsidy is good for us. When he goes home, there’s no power, he knows he has to go back there and spend a large sum to buy fuel and now, they are saying listen, it may be good but the point is we don’t trust government, we haven’t seen the consistencies in the policies you talked about?
ATEDO: I mentioned the issue of equity and distribution. I used Jigawa which is the poorest State in Nigeria as an example. Just because I don’t trust government, should I allow the situation where the lion’s share of the money goes to the upper class and the middle class in Lagos. I’m saying NO! Instead, bring my share home to Jigawa, let me sit down with my governor and decide how we use our share in Jigawa and what it’s used for. Federal Government can only discuss their portion, how to dispense their own portion, but let each state, each L.G.A get his own share and decide how to use it. Even for the man who doesn’t trust government, that is the more reason why he should demand that the N1.1tr or N1.3tr is not disbursed through NNPC and Co., as he does not trust them. He is saying bring my share home I can hold my L.G.A Chairman and/or Governor to account and have a bigger say in the utilisation of that money.
CHANNELS TV: What they are saying is that Economics is also about people. Government says this is intended for the people, to make sure that they benefit from it. But at the moment, we haven’t seen anything that the Government has done to ensure that it cushions the effect.
ATEDO: How can the Governor of Jigawa do anything when he has little or no resources at present?
CHANNELS TV: What about those with resources?
ATEDO: Let us go one step further. That is why you must give more resources to those who do not have resources at all. My point is that Nigeria has 36 States. With all due respect, only about 10 are viable. The rest of them, the little money they get, by the time they finish paying their overheads (largely salaries), there is nothing left. There is no development and my point is that Federal Government has no business dispensing N1.1 trillion on a subsidy that is consumed largely by the rich in these circumstances. Besides, it should not be theirs to dispense. The State have their portion, give it to them, L.G.A’s have theirs, give it to them, then let you and I argue with the Federal Government about its own share. The Federal Government has no business telling the trying to dispense the portion that belongs to Yobe State Government on a subsidy that is consumed largely elsewhere.
I’m amazed and disappointed with some people. ANPP should be the ones clamouring that Yobe should be given its own share. Are you arguing that the N1.1 trillion should be left in the hands of the Minister of Petroleum Resources and NNPC instead? Why should Yobe argue that or Kebbi or Borno?
CHANNELS TV: Sir, with the new perspective you’ve brought; it’s about bringing out the resources or getting back these resources to those who truly need it.
ATEDO: Yes, first, give the States and L.G.A’s their portion. I gave you some figures; Federal Government share: N478 bn, State Governments: N400bn plus, LGAs: N200bn plus. Give them their share first.
CHANNELS TV: Seems like a new, maybe not an entirely new perspective, in the sense that some people have already made this kind of arguments before, but the thing is how come we cannot get exactly the thrust of this particular fuel subsidy removal policy? Is it because there are different arguments? Some people say it’s to deregulate the downstream sector or to stop feeding the fat cats in the industry. What exactly is this policy about?
ATEDO: The policy is first about fiscal viability; it’s about giving unto Caesar what is Caesar’s. My point is that, that N1.1tr or N1.3tr does not belong to the Federal Government, I believe it is even illegal for them to dispense it. First give each person his own share, then also we can render account better, then I can hold my own L.G.A Chairman to tell me what he is doing with his own share. I can’t hold the Federal Government, it is very difficult and my point is that we should each be demanding the share for our State Governments and LGAs also. I repeat that I prefer a fuel voucher arrangement for any State that wants to have a subsidy. Let it define its own poor citizens and give them a voucher for petrol or kerosene or anything sold in a fuel station.
CHANNELS TV: In all fairness to Lagos State, Lagos State is a metropolitan city, it has people from all states living here, in fact it is arguably…
ATEDO: I live here also and I also enjoy the subsidy. I have a number of cars and I am saying, hang on a second I should not qualify to enjoy this subsidy because by the grace of God I am not poor.
CHANNELS TV: Are you from Lagos State?
ATEDO: I am from Rivers State
CHANNELS TV: Exactly
ATEDO: And I’m saying give Rivers State its own share because I have no business staying in Lagos and consuming the share of the poor in Rivers State. I’m saying give them their share in Rivers State to dispense themselves.
CHANNELS TV: Arguably there are poor people living in Lagos from different parts of the Federation.
ATEDO: Yes, but there are poorer and hungrier people elsewhere in the country. They flock to Lagos because life here is better than back where they came from; let me give you some unemployment figures in Nigeria; the unemployment rate in Lagos is 8.3%, the national average is 20%, but then in some states like Bauchi, the unemployment is above 40%. So, who do you think is poorer? Bauchi or Lagos?
CHANNELS TV: Is it not because the rich and the middle class in the state have….
ATEDO: My point is Lagos is even better off in terms of poverty than many states in the federation because the unemployment rate here is relatively low.
CHANNELS TV: Is it not because Lagosians have been empowered to employ those who would otherwise have remained poor and unemployed in many other states?
ATEDO: It s also because the poor from other States have been converging to Lagos where there are more jobs because their areas have no resources whatsoever. And I am saying, we should begin to send resources back to these poor states. In any case some of these resources are rightfully theirs and are being dispensed through Lagos instead via a petrol subsidy that is consumed disproportionately by the rich.
CHANNELS TV: We have some responses coming through from the audience via email. Some say, yes, they hear what you are saying, but they don’t want more committees to be set up by the Federal Government (we talked about that yesterday also). They want the cost of running Government to be cut right now (that Government should cut the cost of running Government)
ATEDO: I agree.
CHANNELS TV: They want to be involved in the process. Government can’t ask that you make sacrifices when they haven’t demonstrated an example themselves; they haven’t led the way. So they can’t remove the subsidy as it were, having not made their own adjustment, but they are asking people to make the adjustment.
ATEDO: I think I have said it repeatedly; we should make all the 3 adjustments together; 1) eliminating wasteful subsidies; 2) belt thightening; and 3) fighting corruption. We should do all at all 3 tiers of Govt + the Legislature from day one, being today.
CHANNELS TV: But they’ve taken only one first?
ATEDO: They are doing all, they can only take things at different speeds. If you bring a bucket that has seven points of leakage and there is one gaping hole in the middle, which one do you seal first? Is it not the biggest hole that consumes N1.3tr that you seal first? I agree with you, there is wastage and there is corruption. If you say in the Police Commission, they embezzled N1b; then stop that one, but how many billions add up to N1.3 trillion?
Do you know that already in Benin Republic there is scarcity of petrol? That is the other thing about the petrol subsidy. Apart from being consumed disproportionately by richer Lagosians, all our neighbouring countries appear to be consuming it too? If you go around Nigeria; I have been to Kebbi State, I have been to Adamawa State, I have been everywhere. Many of the filling stations that are built within 200 km of the border in those parts never seem to have fuel. They just take the allocation of fuel. Some of them never sell fuel in their stations. They take it across the border and sell at world market price. Nobody is stupid. Do you know that already I got reports yesterday; Benin Republic has a fuel crisis. Do you know why they have no fuel right now. Guess why? Because a large chunk of their fuel came from Nigeria before? Nigerians were buying petrol at N65 and going there to sell at N140-N170. Now the price in Lagos is at N140, nobody is taking fuel again to Benin Republic. All of a sudden, Benin Republic has to spend its own foreign exchange to import fuel because all this years, Benin, Cameroon, Chad, Niger, and even countries further afield like Togo and Ghana have been consuming some Nigerian petrol. So now, Benin Republic is facing a crisis. We have been squandering our foreign exchange bringing in petrol, spending N1.3tr only to have some of it spirited across the borders to our neighbours. Now they finally have to fend for themselves.
CHANNELS TV: The government also is to blame because they say we’ve left our refineries to really go under, to the extent that we really don’t have any refineries standing again. So if we had refineries, even the Benin Republic; we will be doing big brother to them, legally speaking.
ATEDO: You see this refinery argument is the biggest myth or mirage in the petrol subsidy argument.
CHANNELS TV: Why is that?
ATEDO: Even if we had 20 refineries all producing petrol locally and selling it at N50 that is the more reason why the petrol should go across the border, because you are producing more volumes of it at lower prices thereby increasing the arbitrage opportunities (N50 in Nigeria versus N200 in Benin Republic). The whole argument about refineries is almost stupid, because we are trying to make it seem refineries can be used to justify wrong pricing. If refineries produce more volume of Nigerian petrol and sell it at a very low price, then our petrol will even go as far as Ivory Coast or may be even Kenya.
CHANNELS TV: In other words, government is not willing to fix refineries?
ATEDO: Also one more thing is that I’m saying even when you fix the refineries, if the price is wrong and you make the petrol cheap, it will still go across the border. Don’t get me wrong, the point I’m making, is not about whether you refined it yourself or not. In anycase refinery margins all over the world are thin, that is why most of the oil majors have stopped refining in many countries. That you refine it locally means that you import less, but if Nigeria is importing 2.5billion barrels of oil a day and you now refine a billion locally and you sell at wrong/cheap prices, a large chunk of it will go across the border.
CHANNELS TV: But if your citizens are okay and doing well and you as a nation are doing well, what’s your business if it goes across the border?
ATEDO: Let me explain. I am talking about 2.5 billion barrels of oil a day. let’s assume we produce so much oil, if we consume 500 million which is refined locally and half of it goes across the border and the price is very low, eventually demand keeps growing because it is going to more and more countries. I have taken fuel before from Nigeria to Ghana in those days we often drove to Ghana. You know how? Because fuel was expensive across the border, so you buy enough in jerry cans, fill your car so that throughout your stay in Ghana you drive on Nigerian fuel. The point I’m making is that refineries even if they are working don’t solve the problem because if you have wrong pricing, the product will still go across the border. Who in Yobe is so stupid to get petrol at N65, and not take it across the border? Do we even have land borders? Have you wandered across some of those states? Nigeria has about 16 States that have land borders with Benin, Cameroon, Chad and Niger. In some of those border states, you have to ask when you are walking on the ground, am I in Nigeria now or am I in Chad or Niger? You don’t even know where the border is. Let us be careful with this undue emphasis on local refineries as a solution.
The second thing is that if you have this system where refined petrol sells in Nigeria at well below the price that it sells in all the neighbouring countries, that is the more reason why the private sector will not build refineries. So we will therefore dependent indefinitely on NNPC to be the only ones to own and operate refineries in Nigeria. With all due respect to NNPC and the Government, they have no business being in business. There are a hundred or so countries where the governments don’t own a single refinery and they have fuel being sold every day.
CHANNELS TV: Mr Peterside, in fairness to the Nigerian populace, they have begun to accept that deregulation is something that is good for them, I mean, we had a critic here, an analyst, yesterday and I asked him point blank, do you support deregulation of the downstream sector? And he said; only an idiot wouldn’t!
It’s just a matter of first things first. A host of people feel that the Federal Government hasn’t put in place the framework which it needs to put in place. It hasn’t shown that it is indeed interested in fighting the corruption which it so claims that we should fight. Those are the things that people think should come first. Show us that you too are sacrificing. For instance, how come till date, we do not know how much a Senator earns, how come till date we do not know how much a member of the Federal Executive Council earns? These are the things that people are saying. Show us you are making sacrifices before you begin to ask us to make sacrifices.
ATEDO: I’m the first person that told you to invite the Senate President into your Studios and ask him to tighten the belt of the Senate. Listen, when you go to the doctor, what ailment do you tell him first? Is it the biggest one or the minor one? The point I’m making is that the single biggest area of corruption and wastage in Nigeria is the N1.3tr of money that belongs to the poor in Bayelsa, Jigawa and Yobe and which is being consumed disproportionately by the rich in Lagos and neighbouring countries.
CHANNELS TV: What a host of people are saying is that the figures (N1.3 trillion subsidy)are arguable in the sense that the Senate was looking into the matter. May be we did not have to spend that much. We needed only about half or maybe way less because people are saying how come it went from N240 bn three years ago to N1.3 trillion?
ATEDO: Let me give you an answer to your question. The wider the disparity between your price of petrol in Nigeria and your neighbouring countries, the more of it goes outside your country. So as the disparity goes wider and wider, N65 versus N170, more of it goes across the border. There could be other irregularities.
CHANNELS TV: Is that the fault of Lagosians?
ATEDO: It’s the fault of the system that tries to deceive itself that you can police borders that you cannot police. Our land borders are just too vast to police. In any case, should our security agents be wasting their time chasing people carrying jerry cans of petrol across the border or should they be facing Boko Haram? Right now nobody is carrying fuel again because you stand to gain nothing. So let them now focus on Boko Haram and more serious things than chasing some little timers taking petrol or kerosene across the borders.
CHANNELS TV: With respect to the budget, which do you think we are operating now, 2012 or 2011?
ATEDO: I am not an expert on the budget timetable, because as far as I am concerned 2011 has come to an end. I know we have made appropriations already for 2011. Off course the Government does not stop, because you still have to pay salaries and so on. The point I’m making is that I’m in favour of Government deciding that in 2012, distribute this money (fuel subsidy) to the 3 tiers of government, let each person design its own policies. So therefore let Rivers State design its own fuel subsidy if it wants one.
CHANNELS TV: Let’s go into the newsroom, when we come back, there are a couple of other issues that Chamberlain, you should actually address. About EFCC and we know about all the EFCC issues concerning governance, concerning Local Government Chairmen and we don’t want the money to go back to these people to manage. NNPC seems to be better than the governors; some of the governors, by the time they leave office, we get to see them before the EFCC, the huge amount we are told they embezzled.
ATEDO: Give the money to the rightful owners; let NNPC or FGN only worry about the Federal Government’s share.
CHANNELS TV: Would it be okay for the rightful owners to consume the money?
ATEDO: Off course not! But it’s theirs to have. Let the populace tell their own Governor how they should consume or invest the money in their own state, because it belongs to them, give it to them.
CHANNELS TV: As a reputable businessman, you do know that there are some factors that need to be considered before taking an even economically correct decision. But at the moment, they have taken such that the citizenry seem to be asking perhaps more questions, because eventually if labour goes on strike on Monday, the economy loses, people have to suffer, but now a group of people have gone to court, they say the operational budget at the moment is a 2011 budget for which only N240bn was provided for subsidy, even though they ended up spending far more than what was budgeted for and so we find ourselves in this mess.
ATEDO: I am also willing to go to court to demand the opposite; that the Federal Government of Nigeria through NNPC and the Minister of Petroleum Resources has no business spending N1.1tr or N1.3tr of money that does not belong to them.
I will also go to court to demand that the money that rightfully belongs to Rivers State be given to us and not given to Lagosians. The money should go to the poor in my State as well. So let’s all go to court and resolve it there.
CHANNELS TV: Are you not from Rivers State?
ATEDO: The point I’m making is exclude people like me from that subsidy, that is why I prefer a fuel voucher system, don’t give me subsidized petrol to put in my car or boat in Lagos. Some of that money belongs to the poor in my state.
CHANNELS TV: I remember very clearly when Mrs Okonjo- Iweala was being screened by the Senate and what her views were on fuel subsidy. She said she thinks that the poor people should get subsidy according to what you earned. Now isn’t there another way we could have thought of restructuring this subsidy in such a way that you have said you don’t need subsidy, you don’t get to get the subsidy but people who need it get it.
ATEDO: But I’ve given you the way already, five times on this programme; fuel vouchers for the poor.
CHANNELS TV: But that particular way is suspect in the sense that, unto those who have more, more will be given, especially when you have not shown prudence in handling it. The pst Governors my colleague has told you, a host of them are being grilled by EFCC, we hear of someone who has been convicted of stealing N10bn that is just one governor. How much more if he is given much more money, what is he going to do with it?
ATEDO: So you prefer the money dispensed through the person that doesn’t have a rightful claim to it? Through a federal government agency, whom you have already accused of allowing the subsidy to grow to N1.3 trillion last year? Is that what you are saying? You prefer the N1.3tr or N1.1 trillion to be retained in the hands of NNPC. What do you have against the fuel voucher system?
CHANNELS TV: Let me tell you what the people prefer. I think we are done with the fuel voucher system; we had to liken it to the meal voucher. What the people prefer when they talk about the tightening of the belt, they still think the government should have done what they call first things first, they should have done all these things you are talking about before taking off the subsidy because as it is now because of that issue of trust, because of that issue of bringing down the cost of governance specifically. Yesterday we were asking the Minister of National Planning about all those bogus figures people say about this presidency when it comes to feeding and we thought we were going to get a figure and clear the air, but we never got that figure.
When we go back and forth with all of this, definitely we will be getting into the mind of people in the wrong way. That is why the people are asking, now you want to take off the subsidy, you have taken it off, shouldn’t you have done the right thing or the first thing first; cut down governance, come out in the open and tell us as Executives, this is what we’ve done, so it’s not about I think they are on the same page with you but where they differ with you is that the government should have done these things first.
ATEDO: Well the government is doing it simultaneously, because of the budget cycle…
CHANNELS TV: They should have done that before coming out.
ATEDO: Point is we have to do all three now.
CHANNELS TV: What are they doing now? What exactly are they doing simultaneously? In terms of fighting corruption and cutting down waste. What exactly are they doing now that we cannot see, because people can’t see it?
ATEDO: Haven’t I mentioned already and I gave you examples of how we should be shutting down complete Federal Government agencies. It is in process and the work of the Steve Oronsaye Committee is virtually ready. But there’s a problem, if you and I don’t demand that the National Assembly take up a big stick and wield it. By the design of the system is that not their job? They are the ones supposed to wield the big stick, saying no more money should go to all these people. But these same people (the idle and unproductive agencies) go and lobby them to give them allocations. We are saying, let us stop all this. I am happy now that we are addressing the substance. This is about fiscal viability. I get very upset in Nigeria when each time we discuss subsidies, they bring out NNPC to come and argue; they are the beneficiaries, they should be driven out of the room, they don’t belong in the room. It’s about fiscal viability, it’s about the Minister of Finance telling us that Nigeria earns so much, I’m going to make sure that each tiers of Govt gets its correct share as designed and then let each State Government or LGA decide what they should be doing. I want to hold my Governor responsible and make sure he spends the money wisely. I should tell my Senator. Hang on you are in the Senate, what are you people doing on belt-tightening or ABC?
My point is let the fuel subsidy not be the issue that will make us close our eyes. We should open our eyes instead. We should demand our rights of the Senate, House of Rep., of the Houses of Assembly, in our States, of the Governors and so on. This is a wake-up call to Nigerians. Let me tell you one thing also, I think now so many facts are out, people have now realized how many billions will now come to the Governors, L.G.A’s from fuel subsidy removal. Let each of us go and take action in our state and L.G.A’s, to demand that they render account, let each of us tell them, if you want subsidy, give it to the poor alone. Let’s design a system that ensures that the rich don’t enjoy it.
CHANNELS TV: But how then do we also explain that government hasn’t wielded the big stick in terms of tackling corruption, plugging that hole, they haven’t wielded the big stick to ensure salaries, emoluments are cut but they are quick to wield the big stick in terms of what the people want, they should do them simultaneously.
ATEDO: With due respect, they (government) have wielded some stick. I think I agree with you in saying that we should demand that the stick be larger. But retaining a wasteful system of N1.3tr is not the solution; we must stop that leakage and other smaller leakages. I am in favour, really, I am in support of you that all other government agencies must cut down their spending. Yes they must cut the share going to recurrent expenditure this year but we should demand for more action.
CHANNELS TV: Mr Peterside, can I say what the immediate effect of this particular treatment for this particular major illness is. It’s made even the poor man who hails from possibly Jigawa, the poorest State in the country, who hails from there and lives in Lagos pay a higher transportation fare to wherever it is that he is working. This is the immediate effect and maybe pay more for food, pay more, in fact some people are beginning to increase telephone calls, they are beginning to increase their rates or tariffs even though telephone companies haven’t done that officially. These prices are going up however marginally, he is beginning to pay more from his pocket and he cannot see what the federal government has done. It doesn’t matter that he is not going to his State; he has found a way to fend for himself.
ATEDO: Are you discussing the whole of Nigeria? It seems you are discussing yourself and the narrow clique you belong to in Lagos. I’m discussing Birin-Kebbi, I have been there before. When I got to Birnin-Kebbi, guess where I bought petrol? From a jerry can on the roadside. All the fuel stations at that time were empty, I suspect because they sell their fuel across the border; I had to buy from jerrycans. So my point is that I’m as concerned about the poor person in Kebbi, 89% of them over there are poor, give them their N14bn for goodness sake. Don’t give a part of it to me in Lagos.
CHANNELS TV: Even though they have not shown us what they did with the previous ones that they had?
ATEDO: My point is has anyone shown you what they have done with theirs? Some of the subsidy goes to neighbouring countries. Another chunk goes to dubious marketers…
CHANNELS TV: So why doesn’t Government scrap NNPC then?
ATEDO: Give unto Caesar what is Caesar’s. That is a discussion for another day. I am among one of the people that advocate very much that Nigerian Governments have no business trying to run a business because they do it very badly and very poorly too.
Volume Two: 12 January, 2012.
Youtube link: www.youtube.com/watch?v=mmb4ZJ6UkQl
|“I am in favour of all such subsidies that are targeted only at the poor and the needy. Power is an excellent example. You can give a subsidy on power and ensure that only the poor enjoy it.”|
Interviewer: Well, we are continuing our focus on the fuel subsidy matter, with a view to seeking a solution to the entire scenario as it were.
Interviewer: Now we are joined by Mr Atedo Peterside who is a member of the Economic Management Team, thank you for joining us again today sir.
Atedo Peterside: Thank you.
Interviewer: Well at the moment, the Senate President met with labour leaders with a view to getting this whole problem sorted out, but it wasn’t long after that the government announced this no work – no pay rule. And then that leaves so many people in doubt as to whether or not the government really intended to get this problem sorted out.
Atedo Peterside: Okay first let me explain that I’m not here to explain everything that everybody in government says. I’m here to explain what I believe in and what I think is true. But having said that, I think everybody seems to have agreed now that the way forward, the three issues – and I don’t know a fourth, if you know one tell me – the three issues now on the table seem to be:- 1) the Federal and State Governments’ efforts to eliminate all wasteful subsidies; 2) government and the people agreeing at all three tiers of government that other forms of wastage and recurrent expenditures should be cut; and 3) people are saying that government must show that it is fighting corruption.
Atedo Peterside: I don’t believe that this is only about the fuel subsidy now. I think for some people its only about fuel price…..look for the NLC it could be a fuel price matter. For the protesters, I look at their placards, I receive their texts, I receive their tweets….some of them are raising issues that are not directly linked to fuel subsidy in the eyes of an economist. What they are saying is that they want good governance. Some of them are saying we will accept fuel subsidy removal, we will accept if for as long as it goes along with the other two things; ONE, belt-tightening and TWO, fighting corruption. And they are saying this should be done by ALL 3 tiers of government, not just the Federal Government i.e. including Senate, including House of Rep, including Governors, State Governments, including Local Government, Chairmen etc. They are saying we want to see sacrifice across the board……..
Interviewer: and the Federal Government….should lead the way…..
Atedo Peterside: Now the point I’m making is that, they are saying that…….this is not about offering us one petrol price or the other, we’ve gone past that now, we’ve heard that before. We are saying we will accept that sacrifice on our own side, you show us you are serious about two things; belt tightening and also fighting corruption at all levels. The people who are carrying protests in Lagos State, some of them where carrying things against some people in Lagos State. Some of them in Rivers where carrying protests against some people in Rivers State, so this has gone beyond fuel.
Atedo Peterside: There are two things now. NLC leadership is discussing fuel price, other people are saying no we want good governance – we will accept removing subsidies as part of the good governance package. Let’s be careful now not to trivialise or insult the intelligence of some protesters by saying that all they want is the chance to buy fuel cheaply. Some have called me and said look, Atedo…..they themselves are fairly wealthy. They can afford any price of fuel, they are saying….but what they are looking for is good governance. But I shouldn’t insult their intelligence by thinking that they are fighting because they want a chance to buy fuel at 65 Naira (N).
Atedo Peterside: Perhaps in the minds of a few NLC and TUC leaders, it is only about fuel price, but I’m saying its broader than that, so therefore even when we are going towards things like the way forward, the solution, if you agree that people are calling for three things, I think it’s a mistake to offer them one. In fact you are almost insulting them. They are calling to discuss subsidy removal, talking about belt-tightening, talking about fighting corruption. Answer them. Talk to them on all three. I would like to see Senate talk to them on all three. I would like to see Governors come out and talk to them on all three.
Atedo Peterside: Today, I opened the Vanguard Newspaper and I saw a photograph; I’m sure you probably saw it too, I saw the Governor of Rivers State standing in a crowd of protestors. He was on a podium with a microphone in hand. He was surrounded by protesters. He was talking to them about all their grievances. Lets not insult people by saying that all of them only care about getting cheap fuel.
Interviewer: What if they think that it is a one-off effort – that you are doing all this because of the situation at the moment (protests)?
Atedo Peterside: You see, that is the point I’m making, that it is for us (the electorate) who voted people into office to constantly remind people in government…..I always speak to the Federal government (I have some access there), I always speak to my Governor, I speak to people in Lagos State Govt where I live, I also speak to my local Senator. I’ve called him at least once this week in particular. My Rep for the House of Representatives; I’ve called him this week. We have spoken. But all these people were elected to hear our voices. They know my stand on the issue. My job is to make sure they know my stand on the issue. Why should I just be directing all my protests at the President when I have a local Rep. and a I have a local Senator? I wish people would go to their local Senator and say:- hang on a second, YOU are my Senator. I voted you in, what is your stand on belt- tightening? What are YOU going to do when you enter Senate to talk about belt-tightening both in the Federal Govt and in the State Government, and in the Senate itself, etc?
Interviewer: If you look at the executive arm of government and the legislature, the framework which a lot of people seem to be demanding for now, because they want a permanent solution not just that if its done now, another government comes back, we find ourselves on the starting blocks again….the PIB (Petroleum Industry Bill) for instance, why haven’t they fought for this to be passed?
Atedo Peterside: Thank you! Sorry let me give you an example. Please I will first digress a little. I am also for a permanent solution. I am among those who will hold up their hands up and say…….I believe that the permanent solution is deregulation. Please lets be careful because people have even attacked me saying that why are you accepting this arrangement, because its not full deregulation. They want full deregulation. I am for full deregulation, but lets be careful…….in Nigeria we spent so much time trying to deceive ourselves we appear to have a military hangover, a military mind set. We have laws on the books like all this PPRA, National Minimum Wage and so on. Those things don’t go very well with fiscal federalism.
Atedo Peterside: When you now say PPRA (by law) is supposed to arrange for a uniform petrol price, we should question why we should even aspire to have a uniform petrol price nationwide? Why not a uniform price for everything else? Those things are unworkable. The result is that we pay some people money for all this “bridging”, “equalisation”, supposedly to help them to equalise prices. In my village, where I come from in Rivers State, there is no “equalisation”. We pay much more for than those in Lagos for petrol. So somebody collects money in the name of equalisation on my behalf to deliver fuel to us at the same price as Lagos and he does not! So my point is let us “throw away” all these artificial things, but unfortunately that brings us back to Senate and House of Reps. Will they scrap laws?
If there is a PPRA Act, it should be proscribed in my opinion because we should go for full deregulation. If there is a national minimum wage act……I think also it is an absurdity for Nigeria to have a single minimum wage for everybody. If you fix everybody at N18, 000…….the man in Lagos gets N18, 000…….the man in Bayelsa N18, 000…..Sokoto N18, 000…….If the cost of living in Sokoto or Bayelsa is less than the Lagos cost of living (which it is), then effectively that N18, 000 translates to a much higher real wage in Bayelsa or Sokoto. We should have been doing all these things at State level. We should have set the minimum wage in relation to the cost of living in different States. These are all mistakes that the political class should be addressing. People are saying that this is a good time for Senate to also scrap that National Minimum Wage Act. Let each state set its minimum wage that they can afford, and let each state decide who they want to subsidise fuel for and so on.
Interviewer: Well we will still come back to that so that we can take a look at the proper framework on how it should work with your suggestions, but if you go back to the PIB for instance, because they also said that’s why some of them distrust government, because this PIB has been discussed some say for the past three years and now they say they have two versions, and they don’t even know which is which.
Atedo Peterside: Its probably more than two, but hang on a second, we are still saying the same thing. We are still saying that our Senators and our House of Rep. Members (Reps) have the responsibility for law making. They must carry….discharge that function effectively. Don’t ask me how come there are multiple versions. I don’t fully know the history, I myself got tired of trying to keep up with the PIB debate. I don’t even know whether there is an effective PIB debate right now, and interestingly the absence of the PIB creates a big question mark for fiscal regimes for those who have major oil exploration projects in the deep offshore, the future LNG plants and so on. So we are losing lots of time while the whole nation is engrossed and discussing all manners of trivial things repeatedly, but the most important one that should translate into major investment activity is held up.
Atedo Peterside: That’s why people like me put pressure on my local Senator and say I want you to go do what you can to push for the PIB; I want you to do what you can to push for all these things. Let everybody do the same. You also call your own Senator and ask him or her: “what are you doing there in the Senate? Why aren’t you acting on PIB? Why don’t you scrap this national minimum wage? Why don’t you scrap this PPRA? If this protest, this dispute in January 2012, will make all of us wake up and demand that various people do the things they are supposed to do, then it is a very good thing for the nation. We have postponed too many things for too long. People talk about fiscal federalism and then they turn around and ask for some nonsense like the Federal Government should do this and that for them to aid wasteful consumption. They should be asking for something close to some devolution of powers. So there are some things that are better done at state level. Even a subsidy on petrol is better administered to my mind at the State level, because only a State Government can discriminate and know who is who based on who pays income tax in that State and determine that you are a rich person and say I’m not giving you a subsidy. You, I know you are poor, I will help you.
Atedo Peterside: The Federal government can’t stay in Abuja and determine who is rich or poor in a State like Cross River.
Interviewer: What a lot of the protesters seem to be saying is that the timing is wrong. They feel government has taken them for granted. What is wrong if government were to say – okay, we will do this in April everyone, that’s the way it will be, because they seem to think that….this is the way previous governments have done anyway. Why don’t they want to……?
Atedo Peterside: Let me tell you two things about this timing issue. People make a big issue of it, all kinds of analysts say; 1) “Oh I support deregulation but I don’t think the timing is right”. Some even say; 2) “Oh government should have given us notice”. Please let you and I brainstorm together one-on-one now. Even now, if the Federal Government announces that okay, we will keep the price at N65, but come April 1 it will be deregulated, we can all extrapolate that deregulation means probably a price of N140. So all of us from today will queue up and try and buy up every litre of petrol at N65. People will bring their drums, jerry cans….there will be no more jerry cans left in Nigeria. Every drum will be full. People will store petrol, houses will burn…..then watch the marketers themselves. Will all the marketers agree to give you petrol today at N65? Or will many, not have enough “sense” to hide a few tanker loads in the bush until April 1 when they can bring it out and sell at N140? Who among them doesn’t know about how to make a profit of 100% in 3 months?
Atedo Peterside: I am not saying that they are all dubious…..that they are corrupt, I’m just saying that don’t tempt people. Don’t think people are naïve. Now, therefore I sympathise with President Jonathan when he made sure that the announcement was sudden. But I myself I was surprised. I was in London, I’m on National Economic Management Team, I didn’t know that deregulation had been announced (and so it should be)….people called me and said:- “ah you people have done it”, I said:- “done what”? Then I was told that the price of petrol had gone up. Now if you told Nigerians that its going to happen tomorrow…. you say you don’t trust these marketers, so why do you trust them to sell something to you today that they can wait three months and sell to you at double the price? Do you think they are naïve? Also, is this the first time that we’ve had deregulation overnight? Nigerians have very short memories.
Interviewer: Yeah but that’s what they are saying, that’s the problem…….
Atedo Peterside: Let me explain to you, when General Obasanjo handled diesel price deregulation, it was overnight. People didn’t get the chance to hide/hoard their old stocks……I know because, the day after, my wife was saying that the person who supplies us with diesel brought diesel, and said the price had doubled and so she called me to say that the man is a thief. I told her no he’s not a thief; there has been overnight deregulation nationwide. If you don’t believe me call other dealers. The point I’m making is that if you had given that same man notice, or other people notice, they would have hoarded old stocks and caused a serious scarcity of the product.
Interviewer: Yeah but two things pop up there, because those who look at it will think – well that’s the problem with government. These are knee-jerk responses as opposed to a proper framework where you can deregulate because they did that at that time, and look at where we are today.
Atedo Peterside: No, sorry, let’s be careful….I said if you give people notice then there will be no fuel today on the streets.
Interviewer: What’s the role of DPR, NNPC, PPRA…….these Government agencies why can they not bring order……..?
Atedo Peterside: Sorry, sorry, DPR or NNPC cannot stop me from taking my car to a filling station, buying fuel at N65, driving it back home, telling my driver to siphon out the fuel into a drum and go back and fill up again. People will aim to fill all the drums they can find in Lagos, and that siphoning business is “legal”.
Interviewer: Okay but won’t that happen, because there is no system in place. If I know that there is a system in place and no matter what happens the product will be available and I’m not being cheated or taken advantage of, why will I go stock up?
Atedo Peterside: You might choose to stock up because you can buy it tomorrow at only N65, and yet if you wait until April you may have to pay more than double the price. Do you get the point? Why wouldn’t you fill all the drums you can find now at N65? So there will be an endless effort by many consumers all over the nation to stock up on petrol…..and please I don’t want to discredit marketers because there are some honest ones out there. The point I’m making…..is you also tempt the unscrupulous marketers to take tanker loads and hide them in various places and so on. Talking about DPR or any other regulator, anybody can…….see that if there is a huge incentive then it is a little naïve to think that some civil servant, who is paid peanuts, will be the one to ensure that there is no corruption or arbitrage.
Atedo Peterside: What if I tell you that somebody can take ten tanker loads and hide them in the bush? Even if he is escorted by a DPR agent, can he not pay off the DPR guy and the DPR guy goes home with some money in his pocket? I’m not trying to insult staff. There are people in there who are honest. I’m just trying to make you realise that this thing is complex. Let me tell you one thing that I proposed:- I said if at all you must continue with this subsidy, it should be via a fuel voucher system and it should be administered at State Government level.
Interviewer: Tell us about this fuel voucher system.
Atedo Peterside: Yes. Let me explain. Take Lagos State government, I checked the numbers. They have about 2.5 million taxpayers paying personal income tax in Lagos State. And I believe they have by far the highest number in the country. The Lagos State Government (LASG) therefore can decide that if they are going t